Credit Overspending

Rigid budgets break, so we built YNAB to be flexible. Overspending happens—your budget is here to help you get back on track. 

If you have general questions about covering overspending (or you want to know more about cash overspending), head over here. If credit (yellow) overspending is what you're after, read on! 

There are two types of spending in YNAB—budgeted and non-budgeted. That's true for spending with cash, and for spending with credit. Of course, YNAB is helping you plan for your credit card payments, so credit spending is handled a bit differently. 

Funded Spending

When you make a purchase on your credit card that you assigned money to the category to cover, YNAB will move that assigned money—cash in your cash account—to your Credit Card Payment category. They'll wait there until you're ready to pay the bill. 

A $100 transaction categorized to Groceries causes the amount available for payment to increase by $100.

Non-Funded Spending (Overspending)

When you use your credit card to buy something and you haven't assigned funds to cover all of the purchase amount, dollars won't move to your Credit Card Payment category. You've now increased what you owe on the card without increasing the cash you have set aside to pay it. 

A $75 transaction categorized to Clothing creates $75 over credit overspending. The amount available for payment does not increase.

Take a look at my Credit Card Payment category after the $100 funded purchase at the Grocery Store and the $75 overspent purchase at Target. The money was available in the spending category to cover the Grocery Store purchase, so that money moved to the Credit Card Payment category. There wasn't any money to cover the Target transaction. That's yellow and overspent in the spending category and the money didn't move to the Credit Card Payment category.

The Credit Card Activity window appears when you click on the amount in the activity column.

I only have $100 for my payment! When I click on Activity, the pop-up gives me a breakdown: $175 in total spending, of which $100 was funded spending. This means that I can only afford to pay $100 towards my card, even though my balance is $175. 

Overspending Creates Debt

Ideally, you'll move money to the spending category to cover overspending in the month it happens. If you do, YNAB has your back—dollars will flow through the spending category to the Credit Card Payment category and increase what you have set aside to pay. 

But what happens if you can't cover the overspending before the month ends? You've created new debt. You've increased what you owe the credit card company but you haven't increased the cash you have set aside to pay by the same amount.

Assigning funds to cover credit overspending

If you want to cover credit spending that happened in the current month, you'll assign funds to the spending category to resolve the yellow, negative alert. When the month rolls over, categories with credit overspending reset to $0, so you won't need to go back to a previous month to cover overspending. 

When you want to pay more than you have available in the Credit Card Payment category or assign funds to cover previous month overspending, you'll assign dollars directly to the assigned column of the Credit Card Payment category in the current month.  

Once the Available amount in the Credit Card Payment category matches what you need to pay—debt from previous overspending plus money for new budgeted purchases—you can confidently make your payment.

Of course, there may be a month where you aren’t able to cover the overspending right away. Not to worry! Set a target so you can budget for it over time. Be sure not to make a payment for more than is available in the Credit Card Payment category.

Need a refresher on credit card payments? We've got you covered.

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